Trade conditions tougher since September - index

Cape Town - Tougher trade conditions since September 2017 suggest a further decline in the value added by the South African trade sector, according to the latest Trade Activity Index (TAI) of the South African Chamber of Commerce and Industry (Sacci), released on Wednesday.

The value added of the trade sector declined by 1% year-on-year in the first three quarters of 2017. New vehicle sales and export trade volumes, however, performed better than general trade conditions indicate.

Sacci said the index also suggests lower import volumes.

Although new trade orders increased in November, some important trade elements contracted, according to the TAI.

The TAI for November declined by 1 index point to 45, remaining in negative territory (below 50). The seasonally adjusted TAI was down by 2 index points compared to October and down 7 index points compared to November last year. According to Sacci, the TAI reflects the sluggish SA economy.

• READ: Trade balance gives SA hope about economy - analyst

Trade expectations

The seasonally adjusted Trade Expectations Index (TEI) improved by 8 points to 59 in November 2017. This is above the borderline level of 50 where the TEI persisted since March 2017, Sacci pointed out.

The volatility of the rand against currencies of major trading partners, higher real interest rates and high unemployment contributed to negative trade prospects, according to Sacci. It is expected that nominal interest rates will remain unchanged, leaving the real cost of finance relatively high, the chamber said.

• READ: SA trade conditions remain constrained - survey

Sub-indices

Sales volumes decreased in November with the sales volume sub-index down from 56 to 49. The new orders index, however, improved to 45 from 41 in October 2017 with expected sales volumes and expected new orders moving substantially into positive territory at 63 and 58 respectively in November 2017.

The inventory index increased slightly.
 
The sales price index decreased by 10 points to 50 and the input price index by 6 points to 66.

"The decline in especially sales prices reflects the tough trade conditions and a ‘buyers’ market’," said Sacci.

"Being relatively high, the price indices contain less demand inflationary pressures. Price expectations, however, remain high with both the sales and input price indices increasing by 3 index points."

About 81% of the respondents experienced higher input costs. The rising crude oil price, higher electricity tariffs and a volatile and weaker rand are fuelling inflationary expectations, in its view.
   
The employment sub-index remained flat at 43 in November 2017, while the employment outlook index for the next 6 months lifted by 8 points to 49 in November 2017 from 41 in October 2017.

(Source: Sacci)

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